Unemployment falls to lowest rate in seven years

In the third quarter of this year the UK unemployment rate fell to 5.3%, its lowest rate since April 2008 ­– according to new figures from the Office for National Statistics (ONS).

Between July and September the number of people out of work was estimated at 1.75 million, a drop of 103,000 on the previous quarter.

The ONS statistics show that there were 31.21 million people in work in the three-month period, which is up 177,000 on the previous three months and an increase of 419,000 on the same period in 2014.

The number of people classed as ‘economically inactive’ – such as students, people caring for a family member or those on long-term sick leave – fell to just under nine million, a drop of 22,000 and the lowest figure for over a year.

However, the employment benefits claimant count – including those on Jobseeker’s Allowance and the out-of-work element of Universal Credit – rose by 3,300 in October, the third consecutive monthly increase.

Pay growth remains relatively weak. In September, total wages rose by 2.0%, down from 3.2% the previous month and the weakest increase since February.

Chris Williamson of research firm Markit, said: ‘The UK labour market continued to tighten in September, as unemployment fell more than expected and employment rose sharply. Pay growth remained surprisingly weak, however, despite further evidence of growing skill shortages, which normally leads to higher salaries.

’Pay growth remains central to policymaking, and interest rates are likely to stay on hold as the official data show pay growth remaining subdued. Today's data therefore support the Bank's current projections that there will be no need to raise interest rates until 2017 due to persistent low inflation.’

The ONS report also showed that the number of EU nationals working in the UK had increased by 324,000 in the past year.